April home prices in Bay Area hit 7-year high

By Pete Carey pcarey@mercurynews.com

Posted:
05/14/2014 10:35:22 AM PDT

Updated:
05/15/2014 06:37:37 AM PDT

In a milestone for the Bay Area housing market, April's home prices reached the highest levels since just before the recession began, with Santa Clara County hitting a new peak in records going back 26 years, according to a report Wednesday.

Prices for single-family homes across much of the region are at levels not seen since fall 2007, the real estate information service DataQuick reported. The Great Recession began in December 2007.

"I don't think it should be a surprise that one of the regions with the nation's strongest economies is the closest to its previous high for home prices," said Andrew LePage of DataQuick. "San Francisco and Silicon Valley are more than pulling their weight."

Buyers flush with earnings from a booming economy are chasing a limited supply of homes for sale, and that's helping drive up prices. It's especially hard for first-time buyers looking for something priced below $500,000. But the hope remains that rising prices will draw more sellers into the marketplace, easing the shortage.

The median price of a resale single-family house was $615,000 in Alameda County, the highest it's been since August 2007; $475,000 in Contra Costa County, the highest since November 2007; $810,000 in Santa Clara County, a new high in DataQuick's records going back to 1988; and $833,050 in San Mateo County, down from $860,000 in March. Alameda County is only 8.1 percent below its all-time peak, while Contra Costa County is 27.4 percent below and San Mateo County is 8 percent below.

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Single-family home sales were either down or nearly flat from a year earlier in the East Bay, Peninsula and South Bay, but up by double digits from the previous month. Sales were up 30.6 percent from March in Santa Clara County, 41.8 percent in San Mateo County, 18.6 percent in Alameda County and 20.3 in Contra Costa County.

With too many buyers chasing too few homes, Silicon Valley has seen bidding contests with houses fetching thousands of dollars over asking prices. The frenzy is discouraging some would-be buyers.

"I see clients giving up," said Avi Urban with Keller Williams in Palo Alto, where the housing market is the hottest and prices are among the highest in the region "They're saying it's crazy with the competition, and they're staying at home." Urban said he's worried that affordability, already low, could worsen.

Uri Safrai, an engineer who moved to Sunnyvale from Israel two years ago, said he had trouble getting a loan at first, and by the time his credit was established, prices had risen 20 percent.

"I dropped out," he said. "Right now, I don't think it's wise to buy something in Silicon Valley. I think we're at the peak. It's just like the stock market and everything else, if you enter at the peak, there's a high chance you are going to lose some money or are not going to earn any money. It's not a good time to go in."

Across the Bay, Sara Rosenthal "lucked out" in buying a home in Pleasant Hill recently.

"It's rough out there," she said. "The only observation I can make is really do your research, make sure you know what you're getting -- the neighborhood, what to expect, the big picture -- and just try to stay as calm as possible."

Rosenthal and her husband, Joshua, lived in Oakland but wanted to move to Contra Costa County for the schools and to be closer to family.

They were bidding on a Pleasant Hill home that was fetching multiple offers when their agent spotted another about to be listed for sale. It was owned by an investor who was testing the market, Sara Rosenthal said. The couple arrived with an offer for $515,000 and bought it on the spot.

"There's way, way more parties interested in buying than in selling," said their agent, Cameron Platt of Harcourts Platt Real Estate in Oakland, who helped the couple sell their Oakland home and buy one in Pleasant Hill.

The median price paid for all types of homes across the nine-county Bay Area rose to $610,000, on sales that were up nearly 20 percent from March, but down slightly from the previous April, according to San Diego-based DataQuick.

That's the highest median price for the Bay Area since it reached $629,500 in November 2007, before the economy tanked and the housing market stalled.

The Bay Area's price for single-family homes was $650,000 in April, still 12 percent below the peak of $738,500 in July 2007.

Condos across the region commanded a median price of $480,000, up nearly 17 percent from April 2012. San Mateo and Santa Clara counties helped boost that price with medians of $555,750 and $510,000, but no county came close to San Francisco, where the median-priced condo fetched $900,000.

While sales are up from March, that's typical as the spring home-buying season gets going. Sales are still nearly 16 percent below the 8,978 average sales for April going back to 1988.

Inventory is pinched in the lower third of the market because of a big drop-off in foreclosures and short sales.

Sales of all types of homes below $500,000 dropped 24.3 percent from the previous April, but rose 9.5 percent for sales $500,000 and above.